A rudderless Greece was drifting closer towards a euro exit on Tuesday night
as the man tasked with forming a new government vowed to abandon its
austerity promises.

Left-wing leader Alexis Tsipras was handed a mandate to attempt to form a coalition, after the two mainstream parties failed to reach a deal following Sunday’s inconclusive election.

But fresh elections loom as soon as next month, after the politician said he would rip up the agreement under which Athens was bailed out by the EU and the International Monetary Fund (IMF), cancelling cuts and reforms.

The turmoil is seen as raising the chances of Greece leaving the shared currency.

Paul Taylor, head of credit rating agency Fitch, said this would not kill the euro, as Germany is too invested in the currency’s survival. “Germany isn’t going to tolerate that, even if one or more countries leave the eurozone,” he said.

He spoke after voters in twice-rescued Greece punished the two main parties, New Democracy and Pasok, amid a growing backlash across the eurozone against the budget cuts and tax rises brought in to tackle debt.

New Democracy, which took the biggest share of votes, then failed to form a coalition government. That saw Mr Tsipras, whose left-wing Syriza party came a surprise second in the polls, on Tuesday given three days to form a government - which he said would oppose the terms of Greek austerity.

“The bail-out parties no longer have a majority in parliament to vote for measures that plunder the country,” he said. “There will be no €11bn (£9bn) of additional austerity measures; 150,000 jobs will not be cut.”

Athens is supposed to be offering up another €11bn of savings to continue to secure international aid.

Mr Tspiras is expected to struggle to form a coalition. Antonis Samaras, the leader of New Democracy, said he could not renege on the austerity pledges that secured the rescue deal. “He is asking me to put my signature to the destruction of Greece. I won’t do this,” he said.

However, if a second election sees Mr Tsipras increase his support, as many expect, his chances of success rise.

Athens, meanwhile, is expected to receive its next €5bn tranche of support from the EU and the IMF on Thursday. Future payments will hinge on political developments, with officials warning that Greece could run out of cash by the end of June.

With no government, it is also unclear who will decide whether Greece will make a €450m bond payment due on May 15. The holders of the debt, issued under foreign rather than Greek law, did not take part in Greece’s recent debt restructuring.